Palestinians in the West Bank town of Nablus have defied an Israeli army curfew for the second day.

Palestinians took to the streets of Nablus to stock up on food, as shops and banks opened to serve them in open defiance of the Israeli curfew. Israeli troops in armored vehicles surround the city, but so far have made no move to enforce the curfew.

This is the first time Palestinians have refused to abide by curfew terms laid down by Israel.

Nablus is one of the seven major population centers in the West Bank under Israeli occupation. Only Jericho is not subject to the Israeli crackdown, which began more than five-weeks ago after a series of Palestinian attacks on Israeli civilians.

Israeli Defense Minister Binyamin Ben Eliezer says he hopes to hold security talks with Palestinian officials in the next few days on a scheme to ease the army's grip in areas that remain quiet.

Israeli Prime Minister Ariel Sharon issued a statement Sunday saying the government plans to ease some restrictions on Palestinians. The statement said the army would shorten curfews and lift roadblocks in some areas and increase from 5,000 to 12,000 the number of Palestinians issued permits to enter Israel to work.

Israel also says it is releasing to the Palestinian finance minister 15-million dollars in frozen tax money. The money is a fraction of the Palestinian tax revenue Israel has withheld since the Palestinian uprising began 22 months ago.

Late Sunday, Israeli troops captured two senior figures of the Islamic militant group Hamas in a covert operation in the West Bank town of Ramallah.

They are identified as Hussein Abu Kwaik and his top lieutenant Freij Rumeidah. Israel says they are behind a number of suicide bombings against Israelis.

Israeli forces tried to kill Mr. Kwaik in March by firing at his car, but they killed his wife and three children instead.